Markets ended a volatile week lower weighed down by continued concerns about elevated valuations, particularly among AI-related companies. Even a better-than-expected earnings report from industry bellwether Nvidia was unable to fully assuage investor concerns. The selloff was also exacerbated the Fed’s October meeting minutes which cast further doubt on the likelihood of a December rate cut. Selling pressure was particularly acute within crypto currencies where Bitcoin fell nearly 10%. Since reaching a record high of $126,273 in early October, Bitcoin has fallen nearly 33%, erasing its year-to-date gains and leaving it down 9% for the year.
Bonds enjoyed their best week in over a month as investors sought safe have assets. The Bloomberg US Aggregate Bond index, the broadest measure of the US bond market is up 7.1% for the year, and on track for its best year since 2020.
Minutes from the Fed’s October meeting revealed an animated discussion and wide range of opinions regarding the need for another rate cut in December. According to the minutes, “participants expressed strongly differing views about what policy decision would most likely be appropriate at the Committee’s December meeting,” but many thought it would “likely be appropriate to keep the target range unchanged for the rest of the year.” Following their release, market expectations for a December rate cut sank to just 30%. However, they rebounded dramatically to end the week at 70%, following comments by influential New York Fed Governor John Williams suggesting he might support another rate cut in December.
